Radical EU Electric Vehicle Growth Places Premium On Rare Earth Elements/Battery Materials Over Jobs

EU underestimates job losses through EV push, industry group says

An employee works on an electric motor for Renault’s Zoe EV. Electric motors have fewer moving parts and less mechanical complexity than internal combustion engines.

Photo credit: Reuters

The European Union is underestimating job losses linked to the transition to electric vehicles, the European automotive industry association ACEA said in a report, ahead of a key European Parliament vote on Monday over on future emissions standards.

The ACEA said that a “forced push” to EVs to meet emissions standards would have a “profound” impact on EU employment, because the production and maintenance of electric drivetrains is much less labor-intensive than conventional drivetrains. Electric motors and drivetrains have fewer moving parts and less mechanical complexity than internal combustion engines.

The ACEA, which represents 15 major Europe-based vehicle manufacturers, says the industry would be hit hard if post-2021 emissions regulations lead to a rapid shift toward electrification. The EU is expected to call for a further CO2 emissions reduction of at least 30 percent by 2030. That target would be almost impossible to meet without a large increase in electric and hybrid vehicles.

Suppliers are expected to be hit especially hard, according to the report by FTI Consulting commissioned by the automakers group and released this week. The report, citing a study by UBS, said suppliers will produce 38 percent fewer parts and components, while automakers will produce 17 percent fewer components.

Another potential drag on employment is overseas production of batteries, which make up 35 percent to 50 percent of the cost of an electric vehicle, the report said. “Policy makers must face the fact that the EU will become extremely dependent on rare-earth materials and batteries produced outside of Europe,” the ACEA said.

“This report makes it clear that overly stringent CO2 targets, as well as unrealistic sales quota for battery electric vehicles (the so-called ‘benchmarks’), could lead to serious structural problems across the EU,” ACEA secretary general Erik Jonnaert said in a statement.

The European Commission’s Impact Assessment report on future emissions regulations published in November 2017 forecasts job losses and gains by sector, depending on different levels of adoption of low-emissions vehicles, which it defines as having tailpipe CO2 emissions of 25 g/km or less.

As many as 16,600 jobs could be lost by 2030 in the automotive sector, assuming an adoption rate of 13 percent to 30 percent, according to the EU. However, that would be partly offset by higher employment in the electricity sector, the EU said.

The report commissioned by the automakers’ group said that the EU did not adequately explain its employment forecasts, given the large differences in complexity between electric and internal combustion drivetrains.

It said that a switch to electric vehicles could result in a 60 percent reduction in employment in powertrain manufacturing, spare part manufacturing and maintenance. The report cited Daimler as saying that 80 percent to 90 percent fewer jobs are necessary to produce electric motors than internal-combustion engines.

Roberto Vavassori, the present of European supplier organization CLEPA, has raised similar concerns ahead of the coming votes. “It’s a challenging balance between the aims of the general public and what is doable by the industry,” Vavassori said in June at CLEPA’s annual innovation awards ceremony, noting that one-third of automotive sector employment was in powertrains. “We believe electrification is an important and essential part of the mobility of the future, but we need an orderly transition to it in Europe, otherwise we will lose our world-leading advantage in mobility.”

The automotive industry is already facing challenges meeting a fleet standard of 95 g/km, set to go into effect by the end of 2021.

Consumers are turning away from diesel engines, which generally emit lower levels of CO2 than gasoline engines, in the wake of the Volkswagen Group scandal. In addition, SUVs and crossovers, which tend to be heavier and less efficient than equivalent sedans or hatchbacks, are making up an ever-increasing percentage of sales.

The introduction this year of the WLTP bench tests and RDE road tests, which aim to better duplicate real world driving conditions, have found that some manufacturers are farther away from the 95 g/km limit than thought.

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